IMVU
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The line between social networking and gaming is increasingly blurring, and internet incumbents are taking notice. NetEase, the second-largest gaming company in China (behind Tencent), is among a group of investors who just backed IMVU, an avatar-focused social network operating out of California.
Menlo Park-based Structural Capital among other institutions that also joined in the strategic round totaling $35 million. IMVU has raised more than $77 million from five rounds since it was co-founded by “The Lean Startup” author Eric Ries back in 2004. The company declined to disclose its post-money valuation.
The fresh investment will be used to fund IMVU’s product development and comes fresh off a restructuring at the company. A new parent organization called Together Labs was formed to oversee its flagship platform IMVU, in which users can create virtual rooms and chat with strangers using custom avatars, a product that’s today considered by some a dating platform; a new service called Vcoin, which lets users buy, gift, earn and convert a digital asset from the IMVU platform into fiat; and other virtual services.
“NetEase operates some of the most successful, biggest in scale, and evergreen MMO [massively multiplayer online] games in China and they see in IMVU business highlights echoing theirs,” Daren Tsui, chief executive officer at Together Labs, told TechCrunch.
“IMVU operates one of the world’s oldest, yet most vibrant and young — in terms of our user base — metaverses. We have many shared business philosophies and complementary know-how. It is a natural fit for us to become partners,” he added.
Founded in 2005, NetEase is now known for its news portal, music streaming app, education products and video games that compete with those of Tencent. It has over the years made a handful of minority investments in companies outside China, though it’s not nearly as aggressive as Tencent in terms of investment pace and volume.
A NetEase spokesperson declined to comment on the investment in IMVU.
The partnership, according to Tsui, would allow the virtual networking company to tap NetEase’s game development and engineering capabilities as well as leverage NetEase’s knowledge in global market strategy as Together Labs launches future products, including one called WithMe.
In 2020, IMVU saw record growth, with over 7 million monthly active users and 400,000 products created every month by IMVU users. The service currently has a footprint in more than 140 countries and is “always looking to expand” in existing markets, including Asia, in which it already has a localized Korean app, according to Tsui.
“With IMVU’s accelerating growth over recent years, the launch of VCOIN, and the development of the new WithMe platform, we felt timing was right to bring all of these products under a new roof to reinforce our commitment for creating authentic human connections in virtual spaces,” said the chief executive.
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There are successful companies that grow fast and garner tons of press. Then there’s Roblox, a company which took at least a decade to hit its stride and has, relative to its current level of success, barely gotten any recognition or attention.
Why has Roblox’s story gone mostly untold? One reason is that it emerged from a whole generation of gaming portals and platforms. Some, like King.com, got lucky or pivoted their business. Others by and large failed.
Once companies like Facebook, Apple and Google got to the gaming scene, it just looked like a bad idea to try to build your own platform — and thus not worth talking about. Added to that, founder and CEO Dave Baszucki seems uninterested in press.
But overall, the problem has been that Roblox just seemed like an insignificant story for many, many years. The company had millions of users, sure. So did any number of popular games. In its early days, Roblox even looked like Minecraft, a game that was released long after Roblox went live, but that grew much, much faster.
Yet here we are today: Roblox now claims that half of all American children aged 9-12 are on its platform. It has jumped to 90 million monthly unique users and is poised to go international, potentially multiplying that number. And it’s unique. Essentially all other distribution services offering games through a portal have eventually fizzled, aside from some distant cousins like Steam.
This is the story of how Roblox not only survived, but built a thriving platform.
(Photo by Steve Jennings/Getty Images for TechCrunch)
Before Roblox, there was Knowledge Revolution, a company that made teaching software. While designed to allow students to simulate physics experiments, perhaps predictably, they also treated it like a game.
“The fun seemed to be in building your own experiment,” says Baszucki. “When people were playing it and we went into schools and labs, they were all making car crashes and buildings fall down, making really funny stuff.” Provided with a sandbox, kids didn’t just make dry experiments about mass or velocity — they made games, or experiences they could show off to friends for a laugh.
Knowledge Revolution was founded in 1989, by Dave Baszucki and his brother Greg (who didn’t later co-found Roblox, but is now on its board). Nearly a decade later, it was acquired for $20 million by MSC Software, which made professional simulation tools. Dave continued there for another four years before leaving to become an angel investor.
Baszucki put money into Friendster, a company that pre-dated Facebook and MySpace in the social networking category. That investment seeded another piece of the idea for Roblox. Taken together, the legacy of Knowledge Revolution and Friendster were the two key components undergirding Roblox: a physics sandbox with strong creation tools, and a social graph.
Baszucki himself is a third piece of the puzzle. Part of an older set of entrepreneurs, which might be called the Steve Jobs generation, Baszucki’s archetype seems closer to Mr. Rogers than Jobs himself: unfailingly polite and enthusiastic, never claiming superior insight, and preferring to pass credit for his accomplishments on to others. In conversation, he shows interests both central and tangential to Roblox, like virtual environments, games, education, digital identity and the future of tech. Somewhere in this heady mix, the idea of Roblox came about.
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